UPDATE Only months after iHeartMedia filed for bankruptcy, their creditors are taking issue with the current compensation structure set out by the Federal Bankruptcy Court of Southern Texas and want more control of the proceedings. The unsecured creditors’ committee after performing, in their words, “a thorough investigation,” questioned the validity of several liens and wants the court to let them prosecute claims against the senior creditors. In the documents filed Monday, creditors have noted “at least 12 colorable and valuable causes of action” and the “validity of certain liens that purportedly secure such claims.”
The filing by the unsecured creditors said the liens were invalid because:
they were given when guarantors were already insolvent
certain financing statements had expired
documentation errors occurred
cash proceeds were combined with cash that was not collateral for the term loans
San Antonio-based iHeart, the largest owner of radio stations in the U.S., filed for bankruptcy in March citing dwindling advertising revenues and increased competition from online media and digital streaming sources. They have said they’ve reached restructuring terms with holders of approximately $10 billion worth of debt and equity.